Private sector investment in African infrastructure in 2020 stands at $19 billion – AfDB
Aug. 27 (THEWILL) – The African Development Bank (AfDB) said private sector investment in African infrastructure in 2020 was $19 billion, the highest since 2016.
AfDB Vice President for Private Sector, Infrastructure and Industrialization, Solomon Quaynor, said so during a webinar hosted by the bank and the Japan International Cooperation Agency (JICA).
The online event was held ahead of the eighth Tokyo International Conference on African Development (TICAD) to be held in Tunisia from August 27-28, under the theme: “Opportunities for the development of private sector infrastructure in Africa. ”
Quaynor, in a statement released by the Bank’s Communications and External Relations Department, said the surge in private sector investment came as most African governments were dealing with the COVID-19 pandemic, limited fiscal space and high debt-to-gross domestic product ratios.
“Private sector investment in infrastructure in Africa reached $19 billion in 2020, or 23%, the highest since 2016. This counter-cyclical role played by the private sector shows the importance of its growing role in financing infrastructure. infrastructure in Africa,” he said. said.
Also speaking, Keichiro Nakazawa, Senior Vice President of JICA, said the discussion will focus on the growth prospects of African countries and the role of the private sector in providing high-quality sustainable infrastructure.
The panelists were Rami Ghandour from Metito, Tshepidi Moremong from Africa 50, Vuyo Hlompho Ntoi from African Infrastructure Investment Managers and Yoshio Kushiya from Sumitomo Corporation.
They were joined by representatives of major development finance institutions, Shohei Hara from JICA, Mike Salawou from AfDB and Sue Barrett, Director of the European Bank for Reconstruction and Development.
Panelists shared their perspectives, successes and challenges they faced in bridging the estimated $67 billion to $107 billion annual infrastructure gap in Africa.
AfDB Association Managing Director Vivek Mittal, who moderated the discussion, said four African countries accounted for the majority of private sector investment over the past two years. The countries are Kenya, South Africa, Ghana and Nigeria.
He said digital businesses in transport and electricity are receiving the most interest.
“Projects take too long, eight to ten years in Africa,” Mittal said, citing the slow development of local talent as another downside.
For his part, Tshepidi Moremong said Africa 50’s strong pipeline in its priority sectors was proof enough that the continent had bankable projects.
Moremong said the sectors were energy, transport, ports, bridges, ICT, health and education. She said the group’s experienced investment team worked closely with development finance institutions and commercial banks, to ensure their bankable projects continued.
Quoting Kigali Innovation City, a tech village that had broken the mold when it comes to innovation, Moremong: “Rwanda, an agriculture-based economy, sees the diversification of its sectors as essential. The success of this project is due to the political will and capacity of the two sponsors, the Rwanda Development Board, and the investors.
She added that the parties had strong discussions on the allocation of risk, which was one of the main obstacles to investment.
Other general obstacles cited include limited deal pipelines, weak feasibility studies, technical studies and business plans, and delays in obtaining licenses.
Mike Salawou also expressed interest “in partnering with JICA to do more”, adding that the bank was involved in a joint port in Morocco with the European Bank for Reconstruction and Development.
Shohei Hara said JICA’s long history of working with governments should give way to a change in mindset as they consider greater participation in privately funded infrastructure.
“Governments need to change their mindsets, as well as ourselves,” he said.
He also noted the role of multilateral partners such as the AfDB in mitigating risks such as foreign exchange, political, regulatory, political and payment obligations.